A short-run Johansen industry model for common-pool resources: planning a fishery's industrial capacity to curb overfishing

Current methods for assessing capacity and its utilisation in fisheries operate at the firm-level, but neglect industry capacity. Here, we introduce the Johansen-Fare measure of plant capacity of the firm into a multi-output, frontier-based version of the short-run Johansen industry model. The model determines firm capacity utilisation such that current industry outputs are maintained, while minimising the use of fixed inputs at industry level and assuming abundant variable inputs. Policy extensions relevant to combating overfishing include tightening quotas, seasonal closures, linking economic and plant capacity, decommissioning schemes and area closures, implementation issues and equity considerations. The application to the Danish fisheries reveals substantial overcapacity in the Danish fleet.